The incubator promotes economic growth in various ways. For instance, the center has been the major sponsor for two government procurement shows. The center has also sponsored a small international conference with the local county's Chamber of Commerce and is networking with other economic development initiatives in the community. These activities will enhance trade and business opportunities for area businesses in both the domestic and foreign markets.
The incubator requires a business plan to become a member of the center. The incubator helps potential clients define their businesses prior to committing a space in the incubator. In terms of exit criteria, the incubator has a three-year graduation policy, but it is enforced flexibly. The incubator offers a 30-day notice to terminate the client/incubator rent agreement, rather than a strict enforcement of the lease contract. The executive director spends a great deal of time in the "political arena" trying to keep the incubator afloat and therefore spends limited amount of time with clients, especially on a one-to-one basis.
The Business Enterprise Center does not have any investment or business development capital available for its clients. The center offers only referrals to financial institutions because of its lack of venture capital or business development funds. Indeed, the incubator finds the lack of adequate financing for clients one of the most critical limitations for business start-ups. The incubator charges its clients for basic services such as desktop publishing services, phone service, and rent. Further, the incubator manager firmly believes that a good entrepreneurial idea should be encouraged and assisted in order to be implemented. Hence, the role of the incubator is to become the nurturing environment where basic infrastructure and counseling services are provided to new entrepreneurs.
In some isolated cases, the incubator-assisted business graduates returned to the incubator to lease space at rates lower than the prevalent market rate in order to continue in business. This is an indication of the incubator's commitment to provide clients with the opportunity to survive during and after their incubation period. This provides encouragement and builds morale for businesspeople. The center assists existing businesses through workshops and training programs and in job generation by qualifying people for entry-level jobs in some vocational areas which are expected to increase in demand in the near future. Within this scheme, the center was designing a program for electricians anticipating job generation in this area.
The Business Enterprise Center offers commercial space at 50% to 75% of market value. The center has created over 100 jobs, and the estimated impact, as measured by local economic indicators, showed that each payroll dollar is turned over three to four times around, according to the executive director. At the time of our visit, there were 16 incubator clients, of whom six were minority males and two were women. To date, the incubator has graduated 14 clients. Among the graduates, one was a minority male and five were women. Its proximity to one of the largest U.S. metropolitan cities affords this incubator many amenities lacking in other small suburban communities. This small city has industrial park space to accommodate new industries, small and large, allowing the clients at the incubator the opportunity to move in at the end of their incubation period. This, in conjunction with the city's infrastructure, is designed with the entrepreneur in mind. The city offers low tax rates and provides a full range of services for new and expanded business development.
Further, the center provides innovative educational opportunities in the community in the following areas: (1) TQM given in cooperation with a local specialty firm; (2) taxation for small businesses offered in conjunction with the local office of the Internal Revenue Service; and (3) SBA loan opportunities, delivered in partnership with a nationally known bank and the Small Business Administration. These programs provide the business community with hands-on training opportunities.
Incubator clients in general, including minority and female entrepreneurs, feel confident about their businesses, the opportunities offered in the real world, and their entrepreneurial abilities. An African-American entrepreneur explained that being a minority is not an issue because, "the way that things are today, there's a real market place for anyone so I don't think that [being a minority] in particular makes it any more difficult today. You're just going to really work hard and persevere with them. Just keep knocking on those doors. That's really all. It's in and out.
Clients in the incubator also generate and nourish ideas among themselves. Clients believe that helping one another has brought them closer together, and that this synergy accounts for a lot of good ideas that has saved them time and money. Clients meet regularly at the parking lot where ideas, problems, and solutions are exchanged. This situation seems to be prevalent in incubators where one- or two-person operations are common, and clients do not have a lot of time to spend in seminars and/or workshops, especially during working hours. The synergistic value of this incubation process and the opportunities for networking were consistently mentioned by in-house clients as one of the most important aspects of their experience at the incubator.
The program began through an interest by the community college to expand its economic development efforts in the community. The college's efforts in economic development included the standard services in technology transfer, customized training, and the preparation of citizens for initial entrance into the workforce. However, it became apparent that the missing component was small business development for individuals with an idea, but no place to turn to for advice and help in starting a new business. The college found a number of citizens returning to adult classes in accounting, marketing, and other business courses for the sole purpose of starting a small business. The college therefore approached the SBA seeking its help in providing services to these individuals. Out of this contact, a partnership was developed with SBA to implement the SBDC.
One important feature of the program is the mentor/protégée program. This program involves mentors who are seasoned entrepreneurs recognized within the community and industry for their excellence and leadership and includes women mentors working with women entrepreneurs. A mentor can be a businesswoman who (1) founded or has owned her company for at least three years, (2) has a successful business as demonstrated by the steady growth of her company, (3) is willing to devote an average of four hours per month to her protégée for at least one year, (4) is willing to work on a one-to-one basis with her protégée to discuss or provide necessary information about her business and to develop a mentoring relationship, and (5) will respect the confidential nature of shared information. The mentor/protégée program helps the participant entrepreneur reach her potential by steering her in the right direction or putting her in touch with the right people.
Mentors play critical roles in the success of the program. Evaluations for the program shows that protégées benefit a great deal from the interaction with their mentors. It appears the program gives an opportunity to articulate what has worked for the mentor in the past, what mistakes the protégée might not anticipate, and what things the protégée might do differently based on the mentor's assessment of the current situation and projections. There are many successful small business owners with potential for participation as mentors. However, the director of the center indicated that they were having problems finding mentors for the program. The reason given most often for not participating is that their businesses are in a growth stage, and they have to devote 100% of their time to the supervision of the daily operations which leaves no time for mentoring activities.
Another major component is the introductory training course. This course is a 30-hour self-employment training course described below in the Education and Training section of this case study. Briefly, the course provides the basic introduction to starting a small business, including the development of a business plan. Following the completion of the introductory training course, personal counseling is available upon the completion of a business plan. This counseling is offered by the consultants who conduct the training course and can continue for up to two years following completion of the course. This contract with the consultant runs for around $3,600 to $3,800 over the two-year period.
In addition, the center uses a cadre of counselors (e.g., CPAs, retired executives, lawyers, marketing people), who donate their time for business counseling purposes. Counseling is only done by appointments arranged through the center. In the director's experience, those clients who receive continuous counseling are more likely to begin a business and succeed than those who come for a single counseling session.
Another component of the SBDC is a ten-week Group Consulting Course that the college offers, and which employs various professional consultants. The cost for this course is $99 for the full ten-week session or $15 per session. The topics include introduction to business plans, legal issues, management, financing, accounting, computers, insurance, credit management, sales, and marketing.
The center is open 12 hours a day, five days a week. The center also makes available business planning software and financial computer programs for clients. Overall, the SBDC has had 29 business start-ups out of 102 people who have completed the course. Through a "we-net" program, the incubator reaches out to women. The program includes the mentor/protégée component and brings specialists in for roundtable discussions on topics of interest to the clients. Successful women entrepreneurs are also featured as guest speakers.
This training program appears to be appreciated in the business community and by those individuals interested in becoming business owners. Thus, this program is used by other community colleges in the metropolitan area as well. Despite its success, the center director has admitted that the training course could be improved. She commented that at this point the course covers too much in a limited time, and she suggested that maybe the course should be expanded.
The college offers the course through an outside consulting firm because it lacks the time and a sufficient pool of expertise to develop such an extensive practical course in small business development. The private consultant firm employs various trainers to deliver the course because of the demand that has been created for the course. Hence, a separate course has been developed to train the trainers. Prospective trainers must be successfully self-employed for at least two years. Further, a trainer needs to be someone who has good presentation skills along with years of experience in a small business.
The private contractor/consultant who operates the training course also conducts the screening of potential course participants. The screening includes four hours of one-on-one counseling based on a person's concepts of a business plan. Selected participants must also sign a contract stipulating that they will reveal their profit/loss information at some unspecified time in the future. Since the course is operated by the private consulting firm on a for-profit basis, this screening process is found appropriate in the community. A community college offering a similar course to the general public would probably not be able to screen so extensively. Once participants are accepted into the program, the consultant is responsible for their training for two years.
Another important component of this program involves the development of working relationships with area high schools. The purpose is to promote entrepreneurship education and to interest students in pursuing opportunities in developing a small business. The emphasis has been on approving high school courses that could be taken for advanced credit at the postsecondary level. The courses approved are Accounting I, Micro Microcomputers, Marketing/Sales, and Sales Management. Students pursuing all these courses could enter the community college with nine credits completed. However, there has been limited success with this effort, perhaps because students do not value training if credit hours are not assigned to it.
An informal perk of the education and training program is the breakfast clubs. These clubs have as their major objective the establishment of networks. Speakers are brought in from businesses to speak on topics of interest to small businesses. Alternative programs will have two or three small business owners speak on their success or on how to overcome a specific problem to small business start-ups.
When asked to identify the major skills needed to develop a small business, entrepreneurs observed that the ability to make judgments and apply common sense was an important characteristic for small business beginners. Another characteristic for entrepreneurship is the desire to become independent and the opportunity to develop new ideas. One client indicated that some people become entrepreneurs by taking calculated risks and that entrepreneurs show leadership because, for the venture to be successful, they have to persuade family, bankers, customers, as well as employees of the viability of their business plans. Entrepreneurship and leadership, according to this perspective, are about convincing people to move in a certain direction and to be enthusiastic about it.
Finally, all the clients agreed that the major accomplishment that turned them in the right direction was the development of a business plan during the class sessions.
The Economic Development Center is a branch of the Business and Professional Institute of the college, and is a rich source of business training for small business and innovators in the area. This assistance is offered through a series of activities including monthly breakfast meetings, workshops, and seminars. This center assists more than 1,000 companies each year.
The college was created in the late 1960s and serves a highly populated three-county area within an identified high-tech, high-growth research and development corridor. The college where the Economic Development Center sits was created to serve an "Advancing Community," as the state's Community College Act was called. Its advertised goal is "to serve the area's special needs, by providing high-quality occupational programs for students working toward professional, semiprofessional, technical, and skilled jobs, with curricula that reflect the quick moving technological demands of our society." Further, the college is a two-campus educational institution under one central administration. One campus is designated as the Central Campus and offers occupational programs and credit courses. The other is designated as the Open Campus, and it offers both credit and noncredit courses and operates learning centers throughout the district. The Business and Professional Institute is part of this Open Campus.
Through the Business and Professional Institute, the college also developed small business seminars, which are offered on a continuous basis due to their popularity. These seminars were developed through a partnership between SBA, DCCA, and the SBDC. The cost for these seminars ranges between $10 to $295 each.
Entrepreneurial workshops and seminars are taught both by the college's faculty and staff and by experienced professionals from a wide variety of backgrounds who provide sound, practical counseling. This cadre of professionals includes private consultants such as business owners, CPAs, other university and college faculty, and professional staff members of SCORE (Service Core of Retired Executives).
Sometimes the college sends the center staff out into the business and general community to identify course, time, and content needs. Through this effort, the center is able to assist this special population with support activities directly related to their needs. The responses are usually considered important enough to offer these courses off campus if that is what is needed.
The center's purpose to provide small business management assistance is based on its belief that business owners, or potential entrepreneurs, lack management training and knowledge. This can be quickly remedied by emphasizing the management skills students need to successfully build a sound business plan. Sometimes the instructors suggest that business owners or potential business owners take specific courses (e.g., accounting) to build up their management and/or business skills. The business management/marketing coordinator added: "Sometimes my students who are engineers are quick and bright, but have no idea about requirements for a successful business. They are lost, and surprised to learn that it takes a lot of preparation to open up a business. You have to have the business plan and be adequately prepared, otherwise you fail."
Other factors in failure may be inadequate preparation in researching the specific market needs for their business, loss on anticipated revenues, or unexpectedly high business expenses. When this occurs, small business owners who cannot afford expensive consultants are at risk of failing. With this in mind, the center sponsors quality counseling sessions available to state business owners with fewer than 500 employees or less than $3.5 million in annual sales.